State Overview: Arizona

In 2010, Arizona voters passed Proposition 203 to allow for the medicinal use of marijuana within the state. The Arizona Medical Marijuana Act (AMMA) went into effect on April 14, 2011, making Arizona the 14th state to adopt a medical marijuana program. The state Department of Health Services is the agency tasked with implementing and administering the AMMA.

Arizona touts one of the most robust medical marijuana programs in the country. There are currently more than 245,000 patients registered through the state’s program. And in 2019, those patients spent more than half a billion dollars on medical marijuana, purchasing almost 83 tons of marijuana.

The number of licenses is capped, with no more than one license for every 10 registered pharmacies within the state. There are currently 130 licenses issued in Arizona, and while not all have operating dispensaries, all licenses have been allocated since 2016.

In 2019, Senate Bill 1494 was enacted to require the issuance of new licenses in late 2020 to areas which either had a dispensary relocate elsewhere, or does not have a dispensary to care for its medical marijuana patient population. The new licensure has been delayed partly due to the ongoing coronavirus pandemic. However, the state Department of Health estimates that six to eight new licenses will likely be issued under this bill.

Unlike some states, Arizona’s medical marijuana program has a vertically integrated license structure. That means a license holder has complete control over the cultivation, processing and retail distribution of medical marijuana. The positive implications of vertical integration revolve around internal cost-savings and efficiency, which include lower transactional costs, strict control over quality, reliability with respect to supply and increased market control.

However, it is not without drawbacks. Vertical integration often demands a large capital outlay due to the need to combine existing businesses or independently establish a second or third arm of an existing business in order to control every stage of the production path. Overall, Arizona’s vertical integration model renders the state’s medical marijuana businesses very successful and attractive to out-of-state groups.

Investors and multi-state operators are rapidly entering the Arizona market. Cannabis sales and patient counts have continued to grow in Arizona’s booming medical marijuana market, and the state is expected to vote on an adult-use cannabis initiative this fall.

Laura Bianchi and Justin Brandt | Bianchi & Brandt

Laura Bianchi is a partner and founding shareholder at the law firm Bianchi & Brandt in Arizona. Bianchi is a three-time Super Lawyers Southwest Rising Star.

Justin Brandt is a founding partner at Bianchi & Brandt in Arizona. He was named in Marijuana Venture’s annual 40 Under 40 and a Super Lawyers Southwest Rising Star.

Bianchi & Brandt is a full-service business, real estate and litigation law firm with an emphasis on the cannabis and hemp industries. Bianchi & Brandt is led by shareholders and law partners Laura A. Bianchi, Esq., and Justin M. Brandt, Esq., who have been advising individuals and businesses in the cannabis industry since 2010. Bianchi & Brandt provides counsel on various day-to-day issues regarding business operations, corporate transactions, regulatory and administrative compliance, as well as represents clients throughout all stages of litigation. Headquartered in Scottsdale, Arizona, the practice holds professional memberships with State Bar Association of Arizona, California, and New Mexico, Maricopa County Bar Association, San Diego County Bar Association, International Cannabis Bar Association, National Cannabis Industry Association, and California Cannabis Industry Association.

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One response to “State Overview: Arizona”

  1. […] Bianchi & Brandt’s shareholders and partners, Laura A. Bianchi Esq., and Justin M. Brandt Esq., were recently profiled in the recent special legal issue of Marijuana Venture. The dynamic law duo also detailed the state of Arizona’s cannabis rules and regulations. You can read the full article here. […]

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